VIEWPOINT: Why New York’s Health Premiums Keep Going Up

New Yorkers continue to face some of the costliest health-insurance premiums in the U.S., and the insurance industry’s recently finalized rate applications shed light on why that is. In summaries filed with the state regulators, insurers attributed their price hikes to rising costs — including state-specific factors, such as insurance taxes and coverage mandates, as well as broad national trends, such as surging hospital and drug claims. These and other forces have pushed New York’s premiums to the top of the national price range. According to a federal survey of employer-sponsored insurance, the Empire State’s businesses and consumers paid an average of $9,589 for single coverage in 2024, which was the highest in the country and $1,100 or 13 percent above the national average. New York was also No. 1 for employee-plus-one coverage, with an average cost of $19,431, and No. 5 for family coverage, at $27,188. Those averages are likely to continue climbing. In early September, the state Department of Financial Services announced higher-than-inflation premium increases for plans covering some 900,000 New Yorkers, or about one-eighth of the commercial market. DFS approved premium hikes averaging 7 percent for individuals directly purchasing coverage and 13 percent for small employers. Those hikes were 2.4 times and 4.5 times the inflation rate, respectively. (Premiums for most companies with 100 or more employees are not subject to state regulation.) Although premiums in the regulated categories will be going up by about $1 billion, DFS headlined its news release with a claim that it had “saved” consumers $959 million. This is because insurers initially asked for even larger hikes, which the department cut roughly in half. The cost drivers cited in rate applications varied from plan to plan, but certain themes emerged. The major factor mentioned by most companies was surging claims — a combination of an aging customer base needing more medical care, and hospitals and doctors charging higher prices for their services. For example, New York City–based Healthfirst said its hospital and physician claims were up 10 percent and its prescription-drug claims were up 16 percent. Other plans mentioned federal-policy shifts, especially the looming expiration of enhanced Affordable Care Act (ACA) tax credits. The enhanced credits, enacted during the pandemic, reduced the net cost of coverage purchased by individuals through ACA insurance exchanges — which has encouraged more people to sign up. If they expire as scheduled on Dec. 31, enrollment in the ACA market is expected to decline — especially among healthier people with less need for coverage — which will result in a sicker risk pool and higher costs for the remaining buyers. These trends help to explain why premiums are rising nationwide. Other factors cited in the regulatory filings are unique to New York — and therefore explain why its premiums are costlier than in other states. One such issue is taxes on health insurance, which are unusually heavy in New York — and which were itemized in a filing by the insurer Anthem:

• A surcharge of 9.63 percent on hospital services levied under the Health Care Reform Act of 1996.
• A “covered lives assessment,” also levied under the 1996 law, which varies from $3.52 to $15.93 per insurance customer per month.
• A premium tax of 1.75 percent on all HMO and insurance contracts, with an additional amount for customers in the Metropolitan Transportation Authority service region.
• A “206” assessment, which was intended to cover the costs of state regulatory activities, but which has been partly diverted to other expenses.

Rochester–based Excellus estimated in its filing that these taxes, taken together, add 5 percent to the cost of health coverage statewide. That would amount to about $500 for individual coverage or $1,400 for family coverage. Not mentioned in this list is New York’s newly enacted tax on managed-care organizations, or MCOs. Although this tax falls most heavily on Medicaid plans as a strategy for maximizing federal matching funds, it also applies to commercial coverage at a rate of $1.50 to $2 per member per month. The MCO tax took effect in January, but federal officials have since moved to cancel its approval — meaning it’s likely to expire in the months ahead. Another state-specific factor cited by some health plans is coverage mandates. These are laws requiring insurers to pay for certain services regardless of whether plans consider them to be medically necessary — or to limit or eliminate cost-sharing for certain types of claims. MVP Health Plan attributed 0.1 points of its 8 percent requested rate hike to newly imposed mandates, but did not specify which ones. A 2003 study commissioned by the Employer Alliance for Affordable Health Care estimated that mandates in force at the time added 12.2 percent to the cost of insurance — and the New York Legislature has enacted dozens more since then. In 2024 alone, the legislature passed — and Gov. Kathy Hochul signed — laws requiring insurers to pay for prenatal vitamins, to cover the cost of scalp cooling (to prevent hair loss during cancer treatment), and to cap copayments for EpiPens (an emergency treatment for allergic reactions). Among the mandates approved by the legislature in 2025 — and awaiting the governor’s signature — include bills that would require insurers to cover creative-arts therapy services, to cover speech therapy for stuttering, and to provide a minimum number of inhalers for asthma patients without cost-sharing. While not the only cause of New York’s high health premiums, state-imposed taxes and mandates are clearly contributing factors — and fully within the Albany’s power to control. If they want health coverage to be more affordable and accessible, Gov. Hochul and other elected officials should look to roll back or repeal insurance taxes and mandates instead of continually adding more.      

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Bill Hammond is senior fellow for health policy at the Empire Center for Public Policy, which says it is an independent, nonpartisan, nonprofit think tank located in Albany that promotes public-policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government. Hammond tracks developments in New York’s health-care industry, with a focus on how decisions made in Albany and Washington, D.C. affect the well-being of patients, providers, taxpayers, and the state’s economy.